Three town/city group study by CGR for LGEC

First, it is important to recognize that this study considers consolidation of cities and towns; villages are not included. Since the laws governing cities are quite different than the laws governing towns and villages (for example, cities can pre-empt sales taxes, towns cannot), the conclusions cannot be directly translated to town/village issues. Nonetheless, the study does have interesting general observations about local government consolidation.

The study insightfully identifies how problems with consolidations and shared services often transcend total cost. Rather, they include questions of equitable distribution of costs, equitable distribution of opportunities for increased revenue development, equitable distribution of services, and equity in control.  It draws a useful distinction between equity and cost.

The study illuminates the wide range of service agreements that have evolved over time. It also reveals how common it is for local governments to have tensions between them.  Clearly the town and village of Potsdam are not unique in this respect.

The study cites a remarkable figure for the estimated cost savings of consolidating the cities into the towns; only 2% due to increased efficiency.  As much as the study authors would probably like to report to the LGEC about large savings to be had in consolidations there does not appear to be much to report.  As in other studies of consolidation, benefits that accrue to one group are usually at a cost to another group.  In this case, if the towns were to dissolve and be absorbed into the local city, “Cities can pre-empt sales tax, which, at least from the perspective of members of each group, will likely lead to a shift of substantial sales tax revenues from their surrounding counties to the city/town combination. Further, town court costs would be transferred to the state once they became consolidated into the city court. In both instances, local taxpayers would see substantial benefits, although, in effect, these would be cost transfers (to county and state taxpayers), rather than efficiency gains (p. xi).”  As in many consolidation studies, it is found that cost is more often shifted than reduced.

Perhaps most striking to me, this study completely ignores quality-of-life factors.  While the authors lament some of the complex or missing shared service agreements, they ignore the primary reason for the situation: communities are trying protect and improve the quality of life for their residents. For example, there is little doubt that eliminating the city police force and replacing it with the county sheriff will save money, but is this a quality of life compromise the residents want? Why did they originally build a city police force? Have those reasons changed? Over time residents have decided some things are worth paying for.  The key question is; are they getting good value for their money?  Like most of these studies, the focus is mostly on cost, and less on the more difficult question of value that enters when quality-of-life is considered.

The study asks several questions relevant to North Country concerns; 1) does it make sense to create a city were a large fraction of land is rural/agricultural?, and 2) “is it fair to charge all properties the same rate for services which are clearly differentiated between the higher density urban areas and the rural areas?”  The study does not appear to offer an answer to the first question, and recommends creation of service-areas as a “viable answer” to the second question.

A bit ironically, a study looking at ways to reduce government entities suggests “creation of a county-run department, creation of an agency that cuts across municipal boundaries, or creation of an oversight board” to address water and sewer issues.

The study raises the interesting question of how much consolidation should shift to the county level.  It suggests further study is needed.

To their credit, the authors honestly recognize that consolidation issues are complex and particular to each case.  They recognize there are no easy answers, and indeed the study does not give any answers.  One size does not fit all, and they call for “a tool box of creative governance solutions from which communities can select those options that best meet the long term needs of each community.”

The study contains a significant flaw in the financial analysis.  It uses OSC (Office of the State Comptroller) data, and while the authors acknowledge, “it is generally accepted that OSC data do not necessarily accurately reflect true expenditures or revenues. Thus, a more detailed analysis of financial information from each entity would be necessary for a technically correct assessment of expenditures and revenues (p. 4)”, the study then proceeds to use OSC data for all of its analysis.  The result, apparently, is a technically incorrect analysis.

Additional caution is also needed in interpreting the financial analysis. The study quantifies cost savings but does not quantify cost increases.  For example, in the Norwich analysis, if the town dissolves into the city, cost savings of personnel reductions are estimated to be $214K/year.  But the report only notes; “Increased expenses: It is likely that a consolidated city Police force would need additional staff to cover the Town (p. 17)” without quantifying this expense, which is likely to be more than the projected savings.

The study also illustrates a strange logic in current NYS policy.  The predicted cost savings of dissolving the Town of Oneonta into the City of Oneonta is $320,000/yr, but NYS is offering a dissolution incentive in additional AIM funding of $556,233/yr (p.56).  Somehow in the State’s calculus a net increase in taxpayer spending of $236,233/yr is seen as improving government efficiency.  This obvious incongruity, coupled with State budget problems, calls into question the continuation of incentive AIM funding.